Comments on: Six Common Financial Aid Mistakes to Avoid

By: Sonny

Sonny — Wed, 08 Apr 2009 15:37:14 +0000

Good advice. Perhaps you could have given more info about loans though, since this is really where the bulk of funding will come from for many students. More specifically subsidized vs. unsubsidized loans and the benefits/drawbacks of each.

By: Vicky

Vicky — Tue, 07 Apr 2009 18:27:48 +0000

I would add “Waiting until the last minute to research scholarships.” I was fortunate enough to receive enough merit-based scholarships to pay for all of my college experience, including my off-campus apartment and trips abroad. This package consisted of 5 separate scholarships: four of them had application deadlines before Thanksgiving of my senior year of high school and one of them, the National Merit Scholarship, began with my registering for the PSAT in early spring of my *junior* year.

There are literally hundreds of scholarships from small organizations who are more interested in sending a high school senior to college than they are in maintaining the education of a matriculated student, so early action is key. Some of these competitions receive no more than one or two applications per year because they time their awards to organizational banquets or other events which have no relation whatsoever to the academic year. Even if you are already in school, you’ll find scholarships which require a full year’s membership to a local civic organization or credit union: if you pay your dues and start the clock, you’ll be eligible in two semesters’ time. Begin your research as early as possible and you’ll broaden your options considerably.

By: Mike

Mike — Tue, 07 Apr 2009 17:52:29 +0000

Oh, and #6 isn’t necessarily correct these days. Due to really low interest rates, private loans are beating federal loans, though the terms may not be as generous. You also do need excellent credit to qualify, and there aren’t many lenders left.

By: Mike

Mike — Tue, 07 Apr 2009 17:50:44 +0000

#3 stuck out at me like a sore thumb. Many schools require you to fill out other applications in addition to the FAFSA, and those do sometimes have a fee. Need Access, which is necessary for many law schools, costs something like $25.

By: Ken

Ken — Tue, 07 Apr 2009 00:46:35 +0000

Not looking for scholarships is a big mistake…a friend of mine with a relative who works in fin. aid office..says that students just don’t ask about these and sign up for student loans without even researching this option.

By: MFallon

MFallon — Mon, 06 Apr 2009 17:03:30 +0000

You can file the federal aid application yourself however another option approved by U.S. law is getting help from a fee-based professional student aid advisor and FAFSA preparer. (Higher Education Opportunity Act of 2008.) Much like people choose tax preparers to help them with income taxes, some people prefer having a knowledgeable FAFSA preparer helping them become eligible for the most aid possible. The government’s computer review can approve an inaccurate application – and your aid award will be less than if you hadn’t made the errors. Professional services using with well-trained advisors read every answer to ensure accuracy.

The 137 tax, asset, and dependency questions on the FAFSA can be daunting and time consuming (twice as many questions as basic income forms). But don’t let them deter you. Attend a workshop or get help from a fee-based service. Be sure that if you choose a service that it:

has an unblemished record with the Better Business Bureau;

a long track record preparing FAFSAs specifically;

high ratings from past clients; and

has as their goal to maximize your eligibility for aid.

The competition for student aid this year is fierce. The Department of Education recently reported a more than 10% increase in filings already and Student Financial Aid Services, Inc., the nation’s largest FAFSA advisory service, has reported a more than 35% jump in calls this January compared with last January.

For the 2009 – 2010 academic year, a student can file a FAFSA until June 30, 2010. HOWEVER, the catch is that 70% of all state and college deadlines are before April 15, 2009. The state of Colorado doesn’t have its own deadline, so check with your college/s for their deadlines.

Most aid is awarded on a first-come, first-served basis. Filing early is extremely important – especially given the competition for the $144 billion available in aid today is greater than ever.

By: Alissa

Alissa — Mon, 06 Apr 2009 14:28:32 +0000

#6 isn’t completely correct. Your and your family’s financial situation determine how much you can get in federal loans and which ones. My parents never could qualify for any loan, which was great for me because it meant I could get subsidized and unsubsidized loans each year. Much cheaper than anything my parents could have gotten, even if they qualified.

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Mon, 06 Apr 2009 13:36:32 +0000

That point #1 is even on the list is truly sad . . . It never hurts to ask people!

By: OblivousInvestor

OblivousInvestor — Mon, 06 Apr 2009 13:23:37 +0000

Hi Nate. Excellent collection of tips.

One financial-aid-related mistake I’d like to caution against: Paying off federally subsidized student loans early rather than investing.

As someone who’s only a few years out of school, this is a mistake I’ve seen many recent graduates make.

Student loan interest is deductible as an “above the line” deduction (meaning you don’t need to itemize to be able to deduct it). That means that for federally-subsidized loans, the net interest rate is usually extremely low–often below 3%.

Neglecting to get started investing in an IRA or 401k (especially one with an employer match) in favor of paying off such low-interest loans makes very little sense to me.

By: The Almost Millionaire

The Almost Millionaire — Mon, 06 Apr 2009 13:11:04 +0000

This is great advice for everyone out there dealing with college stuff right now. These mistakes are unnecessary and could be very costly. Thanks for sharing Nate!